Five reasons to be cheerful about the green economy in 2018
From heightened corporate investment in clean energy sources, to an accelerated shift towards resource efficiency and new environmental legislation, we look at some of the major reasons to be optimistic about the outlook of the green economy in 2018.
The green economy in 2018: FIVE reasons to be cheerful...
1) Corporates march full steam ahead with clean energy shift
Last year saw a host of records smashed in the UK’s renewables industry – and we are on course for an even better year in 2018. The corporate sector will undoubtedly seek to capitalise on this boom, alongside the plummeting costs of clean energy sources such as offshore wind.
Expect to see increased businesses activity on climate action through bold renewable energy goals and an alignment towards science-based targets (SBTs), with the number of companies setting SBTs anticipated to rise significantly from its current number of 333 in the next 12-24 months.
Meanwhile, the unprecedented growth of electric vehicles will see more businesses shift towards greener fleets in 2018. This transition comes in light of the UK Government’s proposed 2040 ban on internal combustion engines, which crystallised a vision for long-term sustainable transportation.
The investment community is ratcheting up its own efforts, namely through fossil fuel divestments. December’s One Planet Summit in France saw the World Bank pledge to stop funding new oil and gas exploration from 2019, while both insurance firm and bank ING committed to divest from fossil fuels, with a particular focus on lowering exposure to coal.
The Task Force on Climate-related Financial Disclosures (TCFD) initiative, launched last summer, will play a big role this year in reflecting the financial markets’ growing demand for more useful information to assess those risks.
2) Global community steps up climate leadership
With the US showing no sign of changing its adversarial policy approach to the fight against global warming, as illustrated by Trump’s recent conflation of weather and climate, the leadership mantle in 2018 is likely to be taken up by the once-unlikely champion, China.
The Asian superpower last year confirmed plans to phase-out diesel vehicles and committed to spending $363bn on renewable power capacity by 2020. China last month further signalled its intent to address climate change with the launch of the world’s largest carbon market, in a move tipped to accelerate the shift towards global pollution pricing.
Emissions trading systems are springing up in various parts of the world, such as New Zealand, South Korea and California, which is in talks with the EU to potentially create a common carbon market. The next step will be for those markets to secure prices that have a meaningful impact on business models and corporate strategies.
Closer to home, it appears increasingly likely that new European political poster boy Emmanuel Macron is preparing to cement France’s position as a global climate leader. In December, the French Government passed legislation to ban all exploration of oil and natural gas in its territories by 2040. Macron has consistently promised to boost investment in wind and solar, and is currently working on a plan to deliver funding in energy efficiency and EVs.
3) UK to unveil new 25-Year Environment Plan
One of the first pieces of domestic legislative action due for release this year is the 25-Year Environment Plan, which will map out various pledges to improve specific areas of the environment including water, natural capital, air quality and resource efficiency. Businesses will be keen to see a robust document with tangible measures that will help unlock private sector investment and reverse a decline in Britain’s natural environment.
Michael Gove has promised that the plan, which will be open for consultation, will be released at latest by the end of January, and has hinted that it will include new policies in recycling and food waste. On the latter area, it is thought the Government may step up its voluntary approach, potentially bringing in legally-binding targets to reduce the high levels of food thrown away in UK households each year.
The Plan will be followed by a command paper on the future shape of agriculture as a prelude to the agricultural bill expected in early Spring. It will need to work well with the recently launched Clean Growth Strategy and Industrial Strategy to ensure that green growth becomes a reality.
4) Renewed hope for a ‘Green Brexit’
As part of the new year briefing, Conservative MPs have been told by Downing Street to stress their green credentials, in a bid to improve the public’s - and in particular the under 40s – perception of the Conservatives’ values. One sure-fire way to help achieve this goal is through heightened rhetoric of a so-called “Green Brexit”, touted by Gove as a "once in a lifetime opportunity" to reform how we manage agriculture and fisheries, and care for our environment.
In terms of type of trade deal the UK will aim to secure with its European counterparts post-Brexit, expect to hear plenty of talk of “Norway-minus” and “Canada-plus” deals in 2018. Under the former pathway - considered by many experts as the most likely outcome - Britain would leave the single market and customs union, but still align its rules and regulations. This would see the UK still subjected to EU environmental rules and regulations - welcome news indeed for those concerned about the future of Britain’s air quality and water regulations.
Regardless of the final conclusion of negotiations with Brussels, the UK Government has already sought to alleviate fears about a potential environmental “governance gap” which could come about post-Brexit. A consultation on a new independent body will be outlined later in 2018, paving the way for ministers to be held to account over green standards after the UK has left the EU.
5) Rising tide against single-use packaging
The case against single-use packaging is gathering pace. The Blue Planet II series, in highlighting the sheer scale of plastic building up in the remotest of ecological systems, sparked a wave of emboldened sentiment from politicians and campaigners alike on the need to tackle the scourge of ocean plastic waste. Converted eco-warrior Gove has consulted on the potential of a national plastic bottle return scheme, an idea subsequently embraced by major retailers such as the Co-op and Iceland.
The business community will undoubtedly continue to engage in activities to tackle plastic pollution in 2018. The use of ocean plastics is still a niche initiative, but companies such as Proctor and Gamble (P&G) and Adidas are exploring uses in a closed-loop system. Coffee chain Pret, meanwhile, has already made it the company’s New Year’s resolution to give its customers a 50p discount on the price of hot drinks if they bring their own mug.
It will not be a surprise to see its rivals follow suit in 2018, as firms prepare to guard their business models against a potential tax or charge on single-use plastics, first signalled by Philip Hammond in the Chancellor’s November Budget. In the political sphere, MPs are expected to shortly publish a report on measures to reduce disposable coffee cup use in the UK, following last month’s call from the Environmental Audit Committee (EAC) for improved producer responsibility obligations.